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Cost cutting boosts Merck's profit

Tuesday, April 29, 2014 - 01:27

April 29 - Merck offset patent expirations on drugs by drastically slashing R&D costs. It's in talks to sell its consumer unit to Reckitt Benckiser. Fred Katayama reports.

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Merck took some tough medicine - cutting costs - and that helped boost its quarterly profit. Its move to drastically slash R&D expenses and sell its Sirna Therapeutics unit offset a decline in revenue to lift income. Revenue fell as patents expired on key products like its asthma drug, Singulair, and allergy drug Nasonex, exposing them to strong generic competition. BMO senior analyst Alex Arfaei said, "Merck continues to impress with prudent expense management, particularly in R&D ... the new more focused R&D approach is a significant improvement." Sales also fell in its consumer health business that sells the allergy drug Claritin and sunscreen, Coppertone. It's in talks to sell that unit to Britain's Reckitt Benckiser for about $14 billion. Sources tell Reuters that Germany's Bayer is also trying to buy it. That's all part of the huge M&A wave engulfing the pharmaceutical industry. Viagra maker Pfizer has gotten down on its knees to propose to AstraZeneca after an earlier rejection. Valeant is making a hostile bid for Botox maker Allergan, and sources tell Reuters that Allergan is considering bidding for Shire in a bid to stay independent. Investors bid up Merck at the start of trade, adding on to the stock's 13 percent gain this year.

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Cost cutting boosts Merck's profit

Tuesday, April 29, 2014 - 01:27